Petrol levy here to stay

Cutting excise tax on petrol would mean less money for building new roads, Energy Minister Trevor Mallard says.

Fuel companies yesterday hiked the cost of 91-octane petrol to well over the $1.50 mark -- the highest it has been in real terms since the mid-1970s.

It means that a medium-sized car now costs more than $75 to fill.

The price includes ACC levies, GST, and a 5.6c a litre levy imposed by the Government on April 1.

However, today both Labour and National ruled out dropping the high government levies on petrol.

Mr Mallard said the 5.6c levy contributed towards the Government's extensive road building programme.

"There's a lot of extra money going into roading," Mr Mallard said on National radio.

He said the proportion of taxes to the overall cost of petrol -- roughly 47 per cent -- was lower than it was about five years ago.

Cutting the tax would also encourage even greater consumption of petrol, he said.

National deputy leader Gerry Brownlee told National Radio about $1.3 billion was being gathered through taxes on fossil fuels.

National would continue to gather that, but was committed to holding the levy at its current rate.

It was also offering three times that amount back to income earners through personal tax rates.

He said Labour's proposed carbon tax, set to come into effect in 2007, would add about another 5c a litre to petrol.

Mr Mallard said the Government was trying to reduce New Zealand's dependence on oil through increased use of public transport and pursuing policies such as the use of biofuels.

He said the Government monitored the petrol companies' pricing to try and ensure price gouging was not occurring.

He said there was no current need for regulation of petrol prices.

The 12.5 per cent GST component of petrol is now about 17 cents a litre, compared to about 13 cents when petrol cost 116 cents a litre six months ago.

Statistics NZ figures show that in March this year, 386,000 tonnes of petrol was delivered throughout New Zealand.

Using the same delivery figure, it means the GST take for a month at today's prices is about $15 million more than the equivalent take at February prices.

Crude oil prices are hovering around record levels and Hurricane Katrina in the Gulf of Mexico has been cited as one of the reasons for the latest spikes.

Auckland Chamber of Commerce chief executive Michael Barnett said yesterday businesses would be forced to lift their prices to cover the increased costs.

- NZPA